In this article we will be going over the case of bankruptcy in Scotland (or sequestration). Before we begin, let’s make one thing very clear. You can’t find whether you are in the red zone to declare bankruptcy just by looking at your position in getting a trust deed. In simpler words, using a trust deed calculator won’t tell you whether bankruptcy is what you are getting at.
Now, moving on.
What is bankruptcy?
Bankruptcy is not being able to pay off your debts. If you have a lot of debt piled up and you can’t pay it back in the next years to come and you see the picture getting worse every day – you can file for bankruptcy. Filing bankruptcy will cost you dearly but there are some benefits of declaring bankruptcy.
Benefits of bankruptcy
When you declare bankruptcy, you are given a fresh start. Some loans can’t be written off like student loans. The major benefits are:
- You won’t be contacted by creditors.
- Court actions can’t be taken against you.
- Most debts will be written off.
- You are still eligible to draw some income for living, and keep some assets and/or properties for the same.
It is a great mental relief to start afresh. But it comes with some disadvantages like tainting your credit score for long term, selling of luxury items and business assets, pay a hefty fee, you might not be able to find work or get loans in the future, your home might be sold, etc.
Globally, more than 95% of bankruptcy cases filed are by individuals and not businesses. It’s often a good idea to know your spending limits but if you somehow manage to get in a terrible situation, bankruptcy might be the best thing for you.
Many people use trustworthy debt calculators like trustdeedcalculator.co.uk to try to find out whether they can declare bankruptcy or not. That is not a correct step. You can’t determine it that way, or with your credit score alone.